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INTRUST FUNDS TRUST
3435 STELZER ROAD, COLUMBUS, OHIO 43219
GENERAL AND ACCOUNT INFORMATION:
(888) 266-8787
KANSAS TAX-EXEMPT BOND FUND
INSTITUTIONAL SERVICE CLASS AND
INSTITUTIONAL PREMIUM CLASS PROSPECTUS
INTRUST BANK, N.A. -- INVESTMENT ADVISER
("INTRUST" OR THE "ADVISER")
BISYS FUND SERVICES --
ADMINISTRATOR, SPONSOR AND DISTRIBUTOR ("BISYS")
- --------------------------------------------------------------------------------
This Prospectus describes the Kansas Tax-Exempt Bond Fund (the "Fund")
managed by INTRUST. The Fund seeks to provide current income exempt from Federal
and Kansas taxation.
The Fund offers two classes of shares--the Institutional Service Class and
Institutional Premium Class Shares. See "Other Information -- Capitalization."
The Fund is a separate investment fund of INTRUST Funds Trust (the "Trust"), a
Delaware business trust and registered open-end, management investment company.
A Statement of Additional Information (the "SAI"), dated January 8, 1997
containing additional and more detailed information about the Fund has been
filed with the Securities and Exchange Commission ("SEC") and is hereby
incorporated by reference into this Prospectus. It is available without charge
and can be obtained by writing or calling the Fund at the address and
information number printed above.
SHARES OF THE TRUST ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, INTRUST OR ANY OF ITS AFFILIATES, AND ARE NOT FEDERALLY INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY
OTHER GOVERNMENT AGENCY, AND MAY INVOLVE INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION A PROSPECTIVE INVESTOR
SHOULD KNOW BEFORE INVESTING IN THE FUND AND SHOULD BE READ AND RETAINED FOR
INFORMATION ABOUT THE FUND.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Date of this Prospectus is January 8, 1997
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TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
FUND EXPENSES................................................................. 1
FEE TABLE..................................................................... 1
HIGHLIGHTS.................................................................... 4
THE INVESTMENT POLICIES AND PRACTICES OF THE FUND............................. 5
MANAGEMENT OF THE FUND........................................................ 9
FUND SHARE VALUATION.......................................................... 13
PURCHASE OF FUND SHARES....................................................... 14
MINIMUM PURCHASE REQUIREMENTS................................................. 15
EXCHANGE OF FUND SHARES....................................................... 15
REDEMPTION OF FUND SHARES..................................................... 16
DIVIDENDS, DISTRIBUTIONS AND FEDERAL INCOME TAX............................... 19
INVESTMENT RESTRICTIONS....................................................... 21
RISKS OF INVESTING IN THE FUND................................................ 22
OTHER INFORMATION............................................................. 23
APPENDIX...................................................................... A-1
</TABLE>
(i)
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FUND EXPENSES
The following expense table lists the costs and expenses that an investor
in the Fund will incur either directly or indirectly as a shareholder of the
Fund. The information is based upon estimated expenses during the first year of
operations.(1)
FEE TABLE
<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE CLASS INSTITUTIONAL PREMIUM CLASS
--------------------------- ---------------------------
<S> <C> <C>
SHAREHOLDER TRANSACITON EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)... None None
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering
price)................................ None None
Deferred Sales Load (as a percentage of
redemption proceeds).................. None None
Redemption Fees(2)...................... None None
Exchange Fees........................... None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net
assets)
Management Fees (after waivers and
reimbursements)(3).................... 0.00% 0.00%
12b-1 Fees (after waiver)(4)............ 0.00% 0.00%
Other Expenses (after waivers and
reimbursements)(3, 5)................. 0.21% 0.71%(6)
---- ----
Total Portfolio Operating Expenses
(after waivers and
reimbursements)(3).................... 0.21% 0.71%
==== ====
</TABLE>
The purpose of this table is to assist a shareholder in understanding the
various costs and expenses that an investor in the Fund will bear.
EXAMPLE:*
- ---------------
(1) Shares are offered only to certain institutional investors or other
investors who at the time of purchase have a balance of $1,000 or more
invested in any of the INTRUST Funds, are purchasers through a trust,
investment manager, or account managed or administered by the Adviser, are
employees or ex-employees of INTRUST Financial Corporation or any of its
affiliates, employees of BISYS, or any other service provider, or employees
of INTRUST Financial Corporation or any of its affiliates.
<PAGE> 4
(2) Shareholders may be charged a wire redemption fee by their bank for
receiving a wire payment on their behalf.
(3) Absent fee waivers and/or expense reimbursements, management fees for each
class of the Fund would be 0.30% of the average net assets (annualized) and
Other Expenses are estimated to be 0.45% (annualized) for each class. "Total
Operating Expenses" for the Fund's Institutional Service and Institutional
Premium Class Shares would be 0.75% and 1.25% respectively.
(4) The fee under the Fund's Distribution Plan and Agreement is calculated on
the basis of average net assets of the Fund at an annual rate not to exceed
0.25%. The Fund will not incur any distribution expenses during its first
year of operation.
(5) Other Expenses includes a fee of 0.08% for Shareholder Servicing.
(6) Other Expenses of the Institutional Premium Class are higher than Other
Expenses for the Institutional Service Class because of a shareholder
servicing charge of up to 0.50% of average daily net assets. The shareholder
servicing charge is imposed for recordkeeping, communication with and
education of shareholders, fiduciary services (excluding investment
management) and asset allocation services. Compensation to salespersons may
vary depending upon whether Institutional Service Class or Institutional
Premium Class shares are sold.
* This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return is
hypothetical and should not be considered a representation of past or future
annual return; actual return may be greater or less than the assumed amount.
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE CLASS SHARES INSTITUTIONAL PREMIUM CLASS SHARES
---------------------------------- ----------------------------------
<S> <C> <C>
1 year....................... $ 2 $ 7
3 years...................... $ 7 $ 23
Without waivers and reimbursements
1 year....................... $ 8 $ 13
3 years...................... $ 24 $ 40
</TABLE>
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FINANCIAL HIGHLIGHTS
The following financial highlights are that of the Kansas Tax Free Income
Portfolio (the "SEI Fund"), a series of SEI Kansas Tax Exempt Trust (the "SEI
Trust"). Prior to the reorganization of the SEI Fund with and into the Fund, the
Fund, a newly created entity, had not commenced operations. The following
financial highlights have been audited by Arthur Andersen LLP, independent
public accountants, whose report thereon was unqualified. This information
should be read in conjunction with the SEI Trust's financial statements and
notes thereto which appear, along with the report of Arthur Andersen LLP, in the
SEI Trust's 1996 Annual Report to Shareholders. Additional performance
information is set forth in the SEI Trust's 1996 Annual Report to Shareholders,
which is available upon request and without charge by calling 1-800-342-5734.
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
NET REALIZED
AND
INVESTMENT UNREALIZED
ACTIVITIES DISTRIBUTIONS GAIN (LOSS)
NET ASSET --------- ------------ ON
VALUE NET NET NET INVESTMENTS NET ASSET
BEGINNING INVESTMENT INVESTMENT INVESTMENT TOTAL AND CAPITAL VALUE END TOTAL
OF PERIOD INCOME INCOME GAIN DISTRIBUTIONS TRANSACTIONS OF PERIOD RETURN
--------- --------- --------- ------------ ------------ ------------ --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
KANSAS TAX FREE INCOME PORTFOLIO
FOR THE YEARS ENDED AUGUST 31,
1996 $ 10.63 $ 0.56 $(0.56) $ -- $ (0.56) $ (0.12) $ 10.51 4.23%
1995 10.47 0.57 (0.57) -- (0.57) 0.16 10.63 7.23%
1994 10.91 0.57 (0.57) (0.02) (0.59) (0.42) 10.47 1.41%
1993 10.50 0.58 (0.58) (0.05) (0.63) 0.46 10.91 10.38%
1992 10.13 0.60 (0.59) (0.01) (0.60) 0.37 10.50 9.78%
1991(1) 10.00 0.42 (0.37) -- (0.37) 0.08 10.13 5.12%+
<CAPTION>
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KANSAS TAX FRE
FOR THE YEARS
1996
1995
1994
1993
1992
1991(1)
</TABLE>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT
EXPENSES TO NET INCOME TO
NET ASSETS RATIO OF AVERAGE NET INVESTMENT AVERAGE NET
END OF EXPENSES ASSETS INCOME TO ASSETS PORTFOLIO
PERIOD TO AVERAGE (EXCLUDING AVERAGE (EXCLUDING TURNOVER
(000) NET ASSETS FEE WAIVERS) NET ASSETS FEE WAIVERS) RATE
---------- ---------- ------------ ---------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
KANSAS TAX FREE INCOME PORTFOLIO
FOR THE YEARS ENDED AUGUST 31,
1996 $ 72,066 0.21% 0.51% 5.31% 5.01% 12.71%
1995 65,834 0.21% 0.51% 5.47% 5.17% 17.60%
1994 62,346 0.21% 0.54% 5.36% 5.03% 10.57%
1993 58,197 0.21% 0.51% 5.56% 5.26% 23.04%
1992 45,609 0.22% 0.52% 5.87% 5.57% 12.69%
1991(1) 29,242 0.31%* 0.61%* 5.85%* 5.55%* 21.82%
</TABLE>
- ---------------
* Annualized.
+ Return is for period indicated and has not been annualized.
(1) The Kansas Tax Free Income Portfolio commenced operations on December 10,
1990.
3
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HIGHLIGHTS
This Prospectus describes the Kansas Tax-Exempt Bond Fund (the "Fund")
managed by INTRUST. The Fund has distinct investment objectives and policies.
THE FUND'S INVESTMENT OBJECTIVE
The investment objective of the Fund is to preserve capital while producing
current income for the investor that is exempt from both federal and Kansas
state income taxes. The Fund invests primarily in municipal obligations with
maturities generally ranging 1 to 15 years. It is the intent of the Adviser to
maintain an effective average weighted maturity between 7 and 12 years. As a
fundamental policy, at least 80% of the Fund's net assets will be invested in
tax-exempt securities. At least 65% of the Portfolio's total assets will be
invested in municipal obligations exempt from Kansas state income taxes.
As a matter of Fundamental Policy, notwithstanding any limitation
otherwise, the Fund is authorized to achieve its investment objective by
investing all of its investable assets in an investment company having
substantially the same investment objective and policies as the Fund.
RISKS OF INVESTING IN THE FUND
The price per share of the Fund will fluctuate with changes in value of the
investments held by the Fund. The Kansas Tax-Exempt Bond Fund may concentrate
its investments in securities of Kansas governmental issuers and may therefore
be affected by political, economic or regulatory factors that may impair the
ability of Kansas issuers to pay interest on or to repay the principal of their
debt obligations, for example, financial difficulties of Kansas, its counties,
municipalities and school districts. See "Risks of Investing in the Fund" and
"Kansas Risk Factors" in the SAI. Additionally, there can be no assurance that
the Fund will achieve its investment objective or be successful in preventing or
minimizing the risk of loss that is inherent in investing in particular types of
securities.
MANAGEMENT OF THE FUND
INTRUST Bank, N.A. acts as investment adviser to the Fund. For its
services, INTRUST receives a fee from the Fund based upon the Fund's average
daily net assets. See "Fee Table" and "Management of the Fund" in this
Prospectus.
BISYS Funds Services ("BISYS") acts as administrator and sponsor and
distributor to the Fund and is sometimes referred to herein as "Administrator"
or "Distributor." For its services, BISYS receives a fee from the Fund based on
the Fund's average daily net assets. See "Management of the Fund" in this
Prospectus. BISYS distributes the Fund's shares and may be reimbursed for
certain of its distribution-related expenses.
GUIDE TO INVESTING IN THE INTRUST FAMILY OF FUNDS
Purchase orders for the Fund received by your broker or Service
Organization in proper form prior to 4:00 p.m., Eastern time will become
effective that day.
<TABLE>
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- - Minimum Initial Investment... $1,000
- - Minimum Subsequent
Investment................. $ 50
</TABLE>
The Fund is purchased at net asset value.
Shareholders may exchange shares between Funds in the Trust by telephone or
mail.
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Shareholders may not exchange shares by facsimile.
<TABLE>
<S> <C>
- - Minimum initial exchange..... $ 500
(no minimum for subsequent
exchanges)
</TABLE>
Shareholders may redeem shares by telephone, mail or wire. Shareholders may
not redeem shares by facsimile.
- - The Fund reserves the right to involuntarily redeem upon not less than 30
days notice all shares in a Fund's account which have an aggregate value of
$500 or less.
All dividends and distributions will be automatically paid in additional
shares at net asset value of the applicable Fund unless cash payment is
requested.
- - Distributions for the Fund are paid monthly.
THE INVESTMENT POLICIES AND PRACTICES OF THE FUND
The Fund is a separate investment fund or portfolio, commonly known as a
mutual fund. The Fund is a portfolio of INTRUST Funds Trust (the "Trust"), a
Delaware business trust, organized under the laws of Delaware as an open-end,
management investment company. The Trust's Board of Trustees oversees the
overall management of the Fund and elects the officers of the Fund.
The Fund follows its own investment policies and practices, including
certain investment restrictions. The SAI contains specific investment
restrictions which govern the Fund's investments. Several of those restrictions
and the Fund's investment objectives are fundamental policies, which means that
they may not be changed without a majority vote of shareholders of the Fund.
Except for the objectives and those restrictions specifically identified as
fundamental, all other investment policies and practices described in this
Prospectus and in the SAI are not fundamental, so that the Board of Trustees of
the Trust may change them without shareholder approval.
As a matter of fundamental policy, notwithstanding any limitation
otherwise, the Fund is authorized to seek to achieve its objective by investing
all of its investable assets in an investment company having substantially the
same investment objective as the Fund.
The Adviser selects investments and makes investment decisions based on the
investment objective and policies of the Fund. The following is a description of
investment practices of the Fund and securities in which it invests.
Under normal conditions, the Fund will invest at least 80% of its net
assets in municipal obligations which produce interest that is, in the opinion
of bond counsel, exempt from federal income tax (collectively "Municipal
Obligations"). This investment policy is a fundamental policy of the Fund. At
least 65% of the Fund's total assets will be invested in Municipal Obligations
which are exempt from Kansas state income taxes. The remainder of the Fund may
be invested in Municipal Obligations of other states. Under normal conditions,
the Fund will also invest at least 80% of its net assets in securities the
income from which is not subject to the alternative minimum tax. Although it has
no present intention of doing so, the Fund may invest up to 20% of its assets in
taxable securities for defensive purposes or when sufficient tax exempt
securities considered appropriate by the Adviser are not available for purchase.
The market value of the Fund's fixed income investments will change in
response to
5
<PAGE> 8
interest rate changes and other factors. During periods of falling interest
rates, the values of outstanding fixed income securities generally rise.
Conversely, during periods of rising interest rates, the values of such
securities generally decline. Changes by recognized rating agencies in the
rating of any fixed income security and in the ability of an issuer to make
payments of interest and principal also affect the value of these investments.
Changes in the value of portfolio securities will not necessarily affect cash
income derived from these securities, but will affect the Fund's net asset
value.
The Fund will maintain a dollar-weighted average portfolio maturity of 7
years to 12 years. However, when the Adviser determines that the market
conditions so warrant, the Fund can maintain an average weighted maturity of
less than 7 years.
The Fund may purchase the following types of municipal obligations, but
only if such securities, at the time of purchase, either have the requisite
rating, or, if not rated, are of comparable quality as determined by the
Adviser: (i) municipal bonds rated A or better by Standard and Poor's
Corporation ("S&P") or Moody's Investors Service, Inc. ("Moody's"), and a
maximum of 10% of the Fund's total assets in municipal bonds rated BBB by S&P or
Baa by Moody's; (ii) municipal notes rated at least SP-2 by S&P or MIG-2 or
V-MIG-2 by Moody's; and (iii) tax-exempt commercial paper rated at least A-1 by
S&P or Prime-1 by Moody's. Municipal notes rated SP-2 by S&P have satisfactory
capacity to pay principal and interest; notes rated MIG-2 or VMIG-2 by Moody's
are considered to be of high quality. Bonds rated BBB by S&P have an adequate
capacity to pay interest and repay principal; bonds rated Baa by Moody's are
considered to be medium-grade obligations (i.e., neither highly protected nor
poorly secured) and have speculative characteristics. Capacity for timely
payment on commercial paper with the S&P designation of A-2 is satisfactory and
commercial paper issuers rated Prime-2 by Moody's have a strong ability for
repayment of senior short-term debt obligations. See the Appendix for a more
complete description of securities ratings.
U.S. Treasury Obligations. The Fund may invest in U.S. Treasury
obligations, which are backed by the full faith and credit of the U.S.
Government as to the timely payment of principal and interest. U.S. Treasury
obligations consist of bills, notes, and bonds and separately traded interest
and principal component parts of such obligations known as STRIPS which
generally differ in their interest rates and maturities. U.S. Treasury bills,
which have maturities of up to one year, notes, which have maturities ranging
from one year to 10 years, and bonds, which have maturities of 10 to 30 years,
are direct obligations of the United States Government.
Municipal Commercial Paper. Municipal commercial paper is a debt
obligation with a stated maturity of one year or less which is issued to finance
seasonal working capital needs or as short-term financing in anticipation of
longer-term debt.
Municipal Notes. Municipal notes are generally sold as interim financing
in anticipation of the collection of taxes, a bond sale or receipt of other
revenue. Municipal notes generally have maturities at the time of issuance of
one year or less.
Municipal Bonds. Municipal bonds generally have a maturity at the time of
issuance of more than one year. Municipal bonds may be issued to raise money for
various public purposes -- such as constructing public facilities and making
loans to public institutions.
6
<PAGE> 9
There are generally two types of municipal bonds: general obligation bonds and
revenue bonds. General obligation bonds are backed by the taxing power of the
issuing municipality and are considered the safest type of municipal bond.
Revenue bonds are backed by the revenues of a project or facility -- tolls from
a toll road, for example. Certain types of municipal bonds are issued to obtain
funding for privately operated facilities. Industrial development revenue bonds
(which are private activity bonds) are a specific type of revenue bond backed by
the credit and security of a private user, and therefore investments in these
bonds have more potential risk.
Municipal Leases. The Fund may invest in instruments, or participations in
instruments, issued in connection with lease obligations or installment purchase
contract obligations of municipalities. Although municipal lease obligations do
not constitute general obligations of the issuing municipality, a lease
obligation is ordinarily backed by the municipality's covenant to budget for,
appropriate funds for, and make the payments due under the lease obligation.
However, certain lease obligations contain "non-appropriation" clauses, which
provide that the municipality has no obligation to make lease or installment
purchase payments in future years unless money is appropriated for such purpose
in the relevant years. Municipal lease obligations will be treated as liquid
only if they satisfy criteria set forth in guidelines established by the Board
of Trustees, and there can be no assurance that a market will exist or continue
to exist for any municipal lease obligation.
STRIPS and Zero Coupon Securities. The Fund may invest in separately traded
principal and interest components of securities backed by the full faith and
credit of the United States Treasury. The principal and interests components of
United States Treasury bonds with remaining maturities of longer than ten years
are eligible to be traded independently under the Separate Trading of Registered
Interest and Principal of Securities ("STRIPS") program. Under the STRIPS
program, the principal and interest components are separately issued by the
United States Treasury at the request of depository financial institutions,
which then trade the component parts separately. The interest component of
STRIPS may be more volatile than that of United States Treasury bills with
comparable maturities. The Funds will not actively trade in STRIPS.
The Fund may invest in zero coupon securities. A zero coupon security pays
no interest to its holder during its life and is sold at a discount to its face
value at maturity. The market prices of zero coupon securities generally are
more volatile than the market prices of securities that pay interest
periodically and are more sensitive to changes in interest rates than non-zero
coupon securities having similar maturities and credit qualities.
Variable Rate Demand Obligations. Variable rate demand obligations have a
maturity in the five to twenty year range but carry with them the right of the
holder to put the securities to a remarketing agent or other entity on short
notice, typically seven days or less. Generally, the remarketing agent will
adjust the interest rate every seven days (or at other intervals corresponding
to the notice period for the put), in order to maintain the interest rate at the
prevailing rate for securities with a seven-day maturity. The remarketing agent
is typically a financial intermediary that has agreed to perform these services.
Variable rate master demand obligations permit the Fund to invest fluctuating
amounts at varying rates of interest pursuant to direct arrangements be-
7
<PAGE> 10
tween the Fund, as lender, and the borrower. Because the obligations are direct
lending arrangements between the Fund and the borrower, they will not generally
be traded, and there is no secondary market for them, although they are
redeemable (and thus immediately repayable by the borrower) at principal amount,
plus accrued interest, at any time. The borrower also may prepay up to the full
amount of the obligation without penalty. While master demand obligations, as
such, are not typically rated by credit rating agencies, if not so rated, the
Fund may, under its minimum rating standards, invest in them only if, in the
opinion of the Adviser, they are of an investment quality comparable to other
debt obligations in which the Fund may invest and are within the credit quality
policies, guidelines and procedures established by the Board of Trustees. See
the SAI for further details on variable rate demand obligations and variable
rate master demand obligations.
Other Mutual Funds. The Fund may invest in shares of other open-end,
management investment companies, subject to the limitations of the Act and
subject to such investments being consistent with the overall objective and
policies of the Fund, provided that any such purchases will be limited to
short-term investments in shares of unaffiliated investment companies. The Fund
has adopted a non-fundamental policy to limit such investment in investment
companies to shares of money market funds. The purchase of securities of other
mutual funds results in duplication of expenses such that investors indirectly
bear a proportionate share of the expenses of such mutual funds including
operating costs, and investment advisory and administrative fees.
"When-Issued" and "Forward Commitment" Transactions. The Fund may purchase
securities on a when-issued and delayed-delivery basis and may purchase or sell
securities on a forward commitment basis. When-issued or delayed-delivery
transactions arise when securities are purchased by the Fund with payment and
delivery taking place in the future in order to secure what is considered to be
an advantageous price and yield to the Fund at the time of entering into the
transaction. A forward commitment transaction is an agreement by the Fund to
purchase or sell securities at a specified future date. When the Fund engages in
these transactions, the Fund relies on the buyer or seller, as the case may be,
to consummate the sale. Failure to do so may result in the Fund missing the
opportunity to obtain a price or yield considered to be advantageous. When-
issued and delayed-delivery transactions and forward commitment transactions may
be expected to occur a month or more before delivery is due. However, no payment
or delivery is made by the Fund until it receives payment or delivery from the
other party to the transaction. A separate account of liquid assets equal to the
value of purchase commitments will be maintained until payment is made. A
separate account containing only liquid assets, such as cash, U.S. Government
Securities, or other liquid high grade debt obligations equal to the value of
purchase commitments will be maintained with the Fund's custodian until payment
is made. Such transactions have the effect of leverage on the Fund and may
contribute to volatility of the Fund's net asset value. For further information,
see the SAI.
Loans of Portfolio Securities. To increase current income, the Fund may
lend its portfolio securities in an amount up to 33 1/3% of the Fund's total
assets to brokers, dealers and financial institutions, provided certain
conditions are met, including the condition that each loan is secured
continuously by collateral maintained on a daily mark-to-market basis in
8
<PAGE> 11
an amount at least equal to the current market value of the securities loaned.
Repurchase Agreements. Although it has no present intention of doing so,
the Fund may enter into repurchase agreements with U.S. banks and broker-dealers
under which it acquires securities and obtains a simultaneous commitment from
the seller to repurchase the securities at a specified time and at an agreed
upon yield. The agreements will be fully collateralized and the value of the
collateral, including accrued interest, marked-to-market daily. The agreements
may be considered to be loans made by the purchaser, collateralized by the
underlying securities. If the seller should default on its obligation to
repurchase the securities, the Fund may experience a loss of income from the
loaned securities and a decrease in the value of any collateral maintained,
problems in exercising its rights to the underlying securities and costs and
time delays in connection with the disposition of securities. The Fund may not
invest more than 10% of its net assets in repurchase agreements maturing in more
than seven business days and in securities for which market quotations are not
readily available. For more information about repurchase agreements, see
"Investment Policies" in the SAI.
Taxable Securities. The taxable instruments in which the Fund may invest
consist of U.S. Treasury obligations; obligations issued or guaranteed by the
U.S. Government or by its agencies or instrumentalities whether or not backed by
the full faith and credit of the U.S. Government; certificates of deposit,
bankers acceptances and time deposits of U.S. commercial banks or savings and
loan institutions (not including foreign branches of U.S. banks or U.S. branches
of foreign banks) which are members of the Federal Reserve System, the Federal
Deposit Insurance Corporation or the Federal Savings and Loan Insurance
Corporation and which have total assets of $1 billion or more as shown on their
last published financial statements at the time of investment; and repurchase
agreements involving any of the foregoing obligations.
Portfolio Turnover. The Fund generally will not engage in the trading of
securities for the purpose of realizing short-term profits, but the Fund will
adjust its portfolio as it deems advisable in view of prevailing or anticipated
market conditions or fluctuations in interest rates to accomplish its respective
investment objective. For example, the Fund may sell portfolio securities in
anticipation of an adverse market movement. Other than for tax purposes,
frequency of portfolio turnover will not be a limiting factor if the Fund
considers it advantageous to purchase or sell securities. The Fund does not
anticipate that the annual portfolio turnover rate will be in excess of 150%. A
high rate of portfolio turnover involves correspondingly greater transaction
expenses than a lower rate, which expenses must be borne by the Fund and its
shareholders. High portfolio turnover rates may also make it more difficult for
the Fund to satisfy the requirement for qualification as a regulated investment
company under the Internal Revenue Code of 1986, as amended (the "Code"), that
less than 30% of the Fund's gross income in any tax year be derived from gains
on the sale of securities held for less than three months.
MANAGEMENT OF THE FUND
The business and affairs of the Fund are managed under the direction of the
Board of Trustees. Information about the Trustees, as well as the Trust's
executive officers, may be found in the SAI under the heading
"Management--Trustees and Officers."
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<PAGE> 12
THE ADVISER: INTRUST BANK, N.A.
INTRUST Bank, N.A. in Wichita, formerly First National Bank in Wichita (the
"Adviser"), serves as the Fund's investment adviser under an Advisory Agreement
with the Trust (the "Advisory Agreement"). Under the Advisory Agreement, the
Adviser invests the assets of the Fund, and continuously reviews, supervises and
administers the Fund's investment program. The Adviser discharges its
responsibilities subject to the supervision of, and policies set by, the
Trustees of the Trust.
The Adviser is a majority-owned subsidiary of INTRUST Financial Corporation
(formerly First Bancorp of Kansas), a bank holding company. The Adviser is a
national banking association which provides a full range of banking and trust
services to clients. As of September 30, 1996, total assets under management
were approximately $1.17 billion. The Adviser's principal place of business is
located at 105 North Main Street, Box One, Wichita, Kansas 67201.
Michael Colgan, Vice President and Trust Investment Officer for the Adviser
since 1985 is responsible for the day-to-day management of the Fund. Mr. Colgan,
has managed the portfolio of the SEI Kansas Tax Free Income Portfolio since
December 1990.
The Adviser is entitled to a fee, which is calculated daily and paid
monthly, at an annual rate of 0.30% of the average daily net assets of the Fund.
The Adviser may waive its fee, in its discretion, for competitive purposes. In
addition, the Adviser has voluntarily agreed to waive a portion of its fee and
reimburse the Fund if necessary to limit the total operating expenses of the
Institutional Service Class shares of the Fund to not more than 0.21% of the
average daily net assets of the Institutional Service Class shares of the Fund
for the Fund's first year of operation.
Based upon the advice of counsel, INTRUST believes that the performance of
investment advisory services for the Fund will not violate the Glass-Steagall
Act or other applicable banking laws or regulations. However, future statutory
or regulatory changes, as well as future judicial or administrative decisions
and interpretations of present and future statutes and regulations, could
prevent INTRUST from continuing to perform such services for the Fund. If
INTRUST were prohibited from acting as investment adviser to the Fund, it is
expected that the Board of Trustees would recommend to shareholders approval of
a new investment advisory agreement with another qualified investment adviser
selected by the Board or that the Board would recommend other appropriate
action.
THE SPONSOR AND DISTRIBUTOR
BISYS, the Sponsor and Distributor (the "Distributor"), has its principal
office at 3435 Stelzer Road, Columbus, Ohio 43219. The Distributor will receive
orders for, sell, and distribute shares of the Fund. BISYS also serves as
administrator and distributor of other mutual funds
The Distributor may from time to time pay a bonus or other incentive to
dealers that employ registered representatives who sell a minimum dollar amount
of shares of the Fund. Such bonus or other incentive may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and members of their
families to places within or without the United States, or other bonuses, such
as gift certificates or the cash equivalent of such bonuses.
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<PAGE> 13
ADMINISTRATIVE SERVICES
The Fund has also entered into an Administrative Services Contract with
BISYS pursuant to which BISYS provides certain management and administrative
services necessary for the Fund's operations, including: (i) general supervision
of the operation of the Fund, including coordination of the services performed
by the Fund's Adviser, transfer agent, custodian, independent accountants and
legal counsel, regulatory compliance, including the compilation of information
for documents such as reports to, and filings with, the SEC and state securities
commissions, and preparation of proxy statements and shareholder reports for the
Fund; (ii) general supervision relative to the compilation of data required for
the preparation of periodic reports distributed to the Fund's officers and Board
of Trustees; and (iii) furnishing office space and certain facilities required
for conducting the business of the Fund. For these services, BISYS receives from
the Fund a fee, payable monthly, at the annual rate of 0.20% of the Fund's
average daily net assets. Pursuant to a Services Agreement between the Trust and
the Administrator, BISYS assists the Trust with certain transfer and dividend
disbursing agent functions and receives a fee of $15 per account per year plus
out-of-pocket expenses. Pursuant to a Fund Accounting Agreement between the
Trust and the Administrator, the Administrator assists the Trust in calculating
net asset values and provides certain other accounting services for each Fund
described therein, for an annual fee of $30,000 per Fund plus out-of-pocket
expenses.
SERVICE ORGANIZATIONS
Various banks, trust companies, broker-dealers (other than BISYS) or other
financial organizations (collectively, "Service Organizations") also may provide
administrative services for the Fund, such as maintaining shareholder accounts
and records. The Fund may pay fees to Service Organizations (which vary
depending upon the services provided) in amounts up to an annual rate of 0.08%
of the daily net asset value of the Fund's shares owned by shareholders with
whom the Service Organization has a servicing relationship. Institutional
Premium Class shares may pay additional fees in amounts up to an annual rate of
0.50% of the daily net asset value of the Fund's shares owned by shareholders
with whom the Service Organization has a servicing relationship for
recordkeeping, communicating with and education of shareholders, fiduciary
services (excluding investment management) and asset allocation services.
Some Service Organizations may impose additional or different conditions on
their clients, such as requiring their clients to invest more than the Fund's
minimum initial or subsequent investments or charging a direct fee for
servicing. If imposed, these fees would be in addition to any amounts which
might be paid to the Service Organization by the Fund. Each Service Organization
has agreed to transmit to its clients a schedule of any such fees. Shareholders
using Service Organizations are urged to consult with them regarding any such
fees or conditions.
The Glass-Steagall Act and other applicable laws provide that, among other
things, banks may not engage in the business of underwriting, selling or
distributing securities. There is currently no precedent prohibiting banks from
performing administrative and shareholder servicing functions as Service
Organizations. However, judicial or administrative decisions or interpretations
of such laws, as well as changes in either Federal or state regulations relating
to the permissible activities
11
<PAGE> 14
of banks and their subsidiaries or affiliates, could prevent a bank Service
Organization from continuing to perform all or a part of its servicing
activities. If a bank were prohibited from so acting, its shareholder clients
would be permitted to remain shareholders of the Fund and alternative means for
continuing the servicing of such shareholders would be sought. It is not
expected that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences.
The Fund has adopted a Rule 12b-1 Distribution Plan and Agreement (the
"Plan") pursuant to which the Fund may reimburse the Distributor on a monthly
basis for costs and expenses of the Distribution in connection with the
distribution and marketing of shares. These costs and expenses, which are
subject to a maximum limit of 0.25% per annum of the average daily net assets of
the Fund, include (i) advertising by radio, television, newspapers, magazines,
brochures, sales literature, direct mail or any other form of advertising, (ii)
expenses of employees or agents of the Distributor, including salary,
commissions, travel and related expenses, (iii) payments to broker-dealers and
financial institutions for services in connection with the distribution of
shares, including promotional incentives and fees calculated with reference to
the average daily net asset value of shares held by shareholders who have a
brokerage or other service relationship with the broker-dealer or other
institution receiving such fees, (iv) costs of printing prospectuses, statements
of additional information and other materials to be given or sent to prospective
investors, (v) such other similar services as the Trustees determine to be
reasonably calculated to result in the sale of shares of the Fund, (vi) costs of
shareholder servicing which may be incurred by broker-dealers, banks or other
financial institutions, and (vii) other direct and indirect distribution-related
expenses, including the provision of services with respect to maintaining the
assets of the Fund. The Fund will pay all costs and expenses in connection with
the preparation, printing and distribution of its Prospectus to current
shareholders and the operation of its Plan, including related legal and
accounting fees. The Fund will not be liable for distribution expenditures made
by the Distributor in any given year in excess of the maximum amount payable
under the Plan for that Fund year.
OTHER EXPENSES
The Fund bears all costs of its operations other than expenses specifically
assumed by BISYS or INTRUST. The costs borne by the Fund include legal and
accounting expenses; Trustees' fees and expenses; insurance premiums; custodian
and transfer agent fees and expenses; expenses incurred in acquiring or
disposing of the Fund's portfolio securities; expenses of registering and
qualifying the Fund's shares for sale with the SEC and with various state
securities commissions; expenses of obtaining quotations on the Fund's portfolio
securities and pricing of the Fund's shares; expenses of maintaining the Fund's
legal existence and of shareholders' meetings; and expenses of preparation and
distribution to existing shareholders of reports, proxies and prospectuses. The
Fund bears its own expenses associated with its establishment as a series of the
Trust; these expenses are amortized over a five-year period from the
commencement of the Fund's operations. See "Management" in the SAI. Trust
expenses directly attributable to the Fund are charged to the Fund; other
expenses are allocated proportionately among all of the Funds in the Trust in
relation to the net assets of each Fund.
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<PAGE> 15
PORTFOLIO TRANSACTIONS
Pursuant to the Investment Advisory Contract, the Adviser places orders for
the purchase and sale of portfolio investments for the Fund's accounts with
brokers or dealers selected by it in its discretion.
In effecting purchases and sales of portfolio securities for the account of
the Fund, the Adviser will seek the best available price and most favorable
execution of the Fund's orders. Trading does, however, involve transaction
costs. Purchases of underwritten issues may be made, which will include an
underwriting fee paid to the underwriter. The Adviser may cause the Fund to pay
commissions higher than another broker-dealer would have charged if the Adviser
believes the commission paid is reasonable in relation to the value of the
brokerage and research services received by the Adviser. Broker-dealers are
selected on the basis of a variety of factors such as reputation, capital
strength, size and difficulty of order, sale of Fund shares and research
provided to the Adviser.
FUND SHARE VALUATION
The net asset value per share of the Fund is calculated at 4:00 p.m.
(Eastern time), Monday through Friday, on each day the New York Stock Exchange
is open for trading (a "Business Day"), which excludes the following business
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The net asset
value per share of each class of the Fund is computed by dividing the value of
the net assets of each class (i.e., the value of the assets less the
liabilities) by the total number of the outstanding shares of each class. All
expenses, including fees paid to the Adviser, Administrator and Distributor, are
accrued daily and taken into account for the purpose of determining the net
asset value. Between classes, expenses are allocated proportionally based on the
net asset value of each class, except class specific expenses which are
allocated directly to the separate class.
Securities listed on an exchange are valued on the basis of the last sale
prior to the time the valuation is made. If there has been no sale since the
immediately previous valuation, then the current bid price is used. Quotations
are taken for the exchange where the security is primarily traded.
Over-the-counter securities are valued on the basis of the bid price at the
close of business on each Business Day. Securities for which market quotations
are not readily available are valued at fair value as determined in good faith
by or at the direction of the Board of Trustees. Notwithstanding the above,
bonds and other fixed-income securities are valued by using market quotations
and may be valued on the basis of prices provided by a pricing service approved
by the Board of Trustees.
Purchases and sales of securities will often be principal transactions in
the case of debt securities and equity securities traded otherwise than on an
exchange. The purchase or sale of equity securities will frequently involve the
payment of a commission to a broker-dealer who effects the transaction on behalf
of a Fund. Debt securities normally will be purchased or sold from or to issuers
directly or to dealers serving as market makers for the securities at a net
price. Under the 1940 Act, persons affiliated with INTRUST, the Fund or BISYS
Fund Services are prohibited from dealing with the Funds as a principal in the
purchase and sale of securities except in accordance with regulations adopted by
the SEC. The Fund may purchase Municipal Obliga-
13
<PAGE> 16
tions from underwriting syndicates of which INTRUST,the Distributor or other
affiliate is a member under certain conditions in accordance with the provisions
of a rule adopted under the 1940 Act. Under the 1940 Act, persons affiliated
with INTRUST, the Fund or BISYS Fund Services may act as a broker for the Fund.
In order for such persons to effect any portfolio transactions for the Fund, the
commissions, fees or other remuneration received by such persons must be
reasonable and fair compared to the commissions, fees or other remunerations
paid to other brokers in connection with comparable transactions involving
similar securities being purchased or sold on an exchange during a comparable
period of time. This standard would allow the affiliate to receive no more than
the remuneration which would be expected to be received by an unaffiliated
broker in a commensurate arms-length transaction. The Trustees of the Trust
regularly review the commissions paid by the Funds to affiliated brokers.
As permitted by Section 28(e) of the Securities Exchange Act of 1934 (the
"Act"), the Adviser and Portfolio Advisers may cause the Funds to pay a
broker-dealer which provides "brokerage and research services" (as defined in
the Act) to the Adviser and Portfolio Advisers an amount of disclosed commission
for effecting a securities transaction for the Funds in excess of the commission
which another broker-dealer would have charged for effecting that transaction.
INTRUST may, in circumstances in which two or more dealers are in a
position to offer comparable results, give preference to a dealer which has
provided statistical or other research services to INTRUST. By allocating
transactions in this manner, INTRUST is able to supplement its research and
analysis with the views and information of securities firms.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. and subject to seeking the most favorable price and
execution available and such other policies as the Trustees may determine, the
Adviser may consider sales of shares of the Funds as a factor in the selection
of broker-dealers to execute portfolio transactions for the Fund.
PURCHASE OF FUND SHARES
Orders for the purchase of shares will be executed at the net asset value
per share next determined after an order has been received.
The following purchase procedures do not apply to certain fund or trust
accounts that are managed by INTRUST. The customer should consult his or her
trust administrator for proper instructions.
All funds received by the Fund are invested in full and fractional shares
of the Fund. Certificates for shares are not issued. The Administrator maintains
records of each shareholder's holdings of Fund shares, and each shareholder
receives a statement of transactions, holdings and dividends. The Fund reserves
the right to reject any purchase. The Fund does not accept third-party or
foreign checks.
An investment may be made using any of the following methods:
Through an Authorized Broker, Investment Adviser or Service
Organization. Shares are available to new and existing shareholders through
authorized brokers, investment advisers and Service Organizations. To make an
investment using this method, simply complete a Purchase Application and contact
your broker, investment adviser or service organization with instructions as to
the amount you wish to
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<PAGE> 17
invest. Your broker will then contact the Distributor to place the order on your
behalf on that day.
Orders received by your broker or Service Organization for the Fund in
proper order prior to the determination of net asset value and transmitted to
the Distributor prior to the close of its Business Day (which is currently 4:00
p.m., Eastern time), will become effective that day. Brokers who receive orders
are obligated to transmit them promptly. You should receive written confirmation
of your order within a few days of receipt of instructions from your broker.
By Mail: Mail completed application and check made payable to the Fund or
to "The INTRUST Funds Trust" to:
INTRUST Funds Trust
P.O. Box 182498
Columbus, OH 43218-2498
By Wire. Investments may be made directly through the use of wire
transfers of Federal funds. Contact your bank and request it to wire Federal
funds to the Fund. In most cases, your bank will either be a member of the
Federal Reserve Banking System or have a relationship with a bank that is. Your
bank will normally charge you a fee for handling the transaction. To purchase
shares by a Federal funds wire, please first contact BISYS at (888) 266-8787.
Application must be overnighted to:
INTRUST Funds Trust
c/o BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219-8021
Other Purchase Information. Request in "good order" must include the
following documentation: (a) a letter of instruction, if required, signed by all
registered owners of the shares in the names in which they are registered; (b)
any required signatures guaranteed and (c) other supporting legal documents, if
required, in the case of estates, trusts, guardianships, custodianships,
corporations, pension and profit sharing plans and other organizations.
Institutional Accounts. Bank trust departments and other institutional
accounts, not subject to sales charges, may place orders directly with the
Distributor by telephone at (888) 266-8787.
MINIMUM PURCHASE REQUIREMENTS
The minimum initial investment in the Fund is $1,000 unless the investor is
a purchaser who at the time of purchase, has a balance of $1,000 or more in any
of the INTRUST Funds, is a purchaser through a trust investment manager or
account manager or is administered by INTRUST, is an employee or an ex-employee
of INTRUST Financial Corporation or is an employee of any of its affiliates,
BISYS or any other service provider. Any subsequent investments must be at least
$50. All initial investments should be accompanied by a completed Purchase
Application. A Purchase Application accompanies this Prospectus. The Fund
reserves the right to reject purchase orders.
EXCHANGE OF FUND SHARES
The Fund offers two convenient ways to exchange shares in one Fund for
shares in another Fund in the Trust. Before engaging in an exchange transaction,
a shareholder should read carefully the Prospectus describing the Fund into
which the exchange will occur, which is available without charge and can be
15
<PAGE> 18
obtained by writing to BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
43219 or by calling (888) 266-8787. A shareholder may not exchange shares of one
Fund for shares of another Fund if both or either are not qualified for sale in
the state of the shareholder's residence. The minimum amount for an initial
exchange is $500. No minimum is required in subsequent exchanges. The Trust may
terminate or amend the terms of the exchange privilege at any time.
A new account opened by exchange must be established with the same name(s),
address and social security number as the existing account. All exchanges will
be made based on the net asset value next determined following receipt of the
request by a Fund in good order.
An exchange is taxable as a sale of a security on which a gain or loss may
be recognized. Shareholders should receive written confirmation of the exchange
within a few days of the completion of the transaction. Shareholders will
receive at least 60 days' prior written notice of any modification or
termination of the exchange privilege.
Exchange by Mail. To exchange Fund shares by mail, simply send a letter of
instruction to BISYS. The letter of instruction must include: (i) your account
number; (ii) the Fund from and the Fund into which you wish to exchange your
investment; (iii) the dollar or share amount you wish to exchange; and (iv) the
signatures of all registered owners or authorized parties.
Exchange by Telephone. To exchange Fund shares by telephone or if you have
any questions simply call the Funds at (888) 266-8787. You should be prepared to
give the telephone representative the following information: (i) your account
number, social security number and account registration; (ii) the name of the
Fund from and the Fund into which you wish to transfer your investment; and
(iii) the dollar or share amount you wish to exchange. The conversation may be
recorded to protect you and the Fund. Telephone exchanges are available only if
the shareholder so indicates by checking the "yes" box on the Purchase
Application. See "Redemption of Fund Shares -- By Telephone" for a discussion of
telephone transactions generally. This option will be suspended for a period of
10 days following a telephonic address change.
Automatic Investment Program. An eligible shareholder may also participate
in the Automatic Investment Program, an investment plan that automatically
debits money from the shareholder's bank account and invests it in one or more
of the Funds in the Trust through the use of electronic funds transfers or
automatic bank drafts. Shareholders may elect to make subsequent investments by
transfers of a minimum of $50 on either the fifth or twentieth day of each month
into their established Fund account. Contact the Fund for more information about
the Automatic Investment Program.
REDEMPTION OF FUND SHARES
Shareholders may redeem their shares, in whole or in part, on any Business
Day. Shares will be redeemed at the net asset value next determined after a
redemption request in good order has been received by the Fund. See
"Determination of Net Asset Value." A redemption is a taxable transaction on
which gain or loss may be recognized.
Redemption of shares purchased by check will be effected immediately upon
clearance of the purchase check, which may take up to 15 days after those shares
have been credited to the shareholder's account. Shareholders
16
<PAGE> 19
may avoid this delay by investing through wire transfers of Federal funds.
During the period prior to the time the shares are redeemed, dividends on the
shares will continue to accrue and be payable and the shareholder will be
entitled to exercise all other beneficial rights of ownership.
Once the shares are redeemed, the Fund will ordinarily send the proceeds by
check to the shareholder at the address of record on the next Business Day. The
Fund may, however, take up to seven days to make payment. This will not be the
customary practice. Also, if the New York Stock Exchange is closed (or when
trading is restricted) for any reason other than the customary weekend or
holiday closing or if an emergency condition as determined by the SEC merits
such action, the Fund may suspend redemptions or postpone payment dates.
Redemption Methods. To ensure acceptance of your redemption request, it is
important to follow the procedures described below. Although the Fund has no
present intention to do so, the Fund reserves the right to refuse or to limit
the frequency of any telephone or wire redemptions. Of course, it may be
difficult to place orders by telephone during periods of severe market or
economic change, and a shareholder should consider alternative methods of
communications, such as couriers. The Fund's services and their provisions may
be modified or terminated at any time by the Fund. If the Fund terminates any
particular service, they will do so only after giving written notice to
shareholders. Redemption by mail will always be available to shareholders.
You may redeem your shares using any of the following methods:
Through an Authorized Broker, Investment Adviser or Service
Organization. You may redeem your shares by contacting your broker or
investment adviser or service organization representative and instructing him or
her to redeem your shares. He or she will then contact the Distributor and place
a redemption trade on your behalf. You may be charged a fee for this service.
By Mail. You may redeem your shares by sending a letter directly to the
Distributor. To be accepted, a letter requesting redemption must include: (i)
the Fund name and account registration from which you are redeeming shares; (ii)
your account number; (iii) the amount to be redeemed, (iv) the signatures of all
registered owners; and (v) a signature guarantee by any eligible guarantor
institution including a member of a national securities exchange or a commercial
bank or trust company, broker-dealers, credit unions and savings associations.
Corporations, partnerships, trusts or other legal entities will be required to
submit additional documentation (only required if proceeds are to be sent to an
address other than the registered address on record).
By Telephone. You may redeem your shares by calling the Fund toll free at
(888) 266-8787. You should be prepared to give the telephone representative the
following information: (i) your account number, social security number and
account registration; (ii) the Fund name from which you are redeeming shares;
and (iii) the amount to be redeemed. The conversation may be recorded to protect
you and the Fund. Telephone redemptions are available only if the shareholder so
indicates by checking the "yes" box on the Purchase Application or on the
Optional Services Form. The Fund employs reasonable procedures to confirm that
instructions communicated by telephone are genuine. If the Fund fails to employ
such reasonable procedures, they may be liable for any loss, damage or expense
arising out of any telephone trans-
17
<PAGE> 20
actions purporting to be on a shareholder's behalf. In order to assure the
accuracy of instructions received by telephone, the Fund requires some form of
personal identification prior to acting upon instructions received by telephone,
record telephone instructions and provide written confirmation to investors of
such transactions. Redemption requests transmitted via facsimile will not be
accepted. This option will be suspended for a period of 10 days following a
telephonic address change.
By Wire. You may redeem your shares by contacting the Fund by mail or
telephone and instructing them to send a wire transmission to your personal
bank.
Your instructions should include: (i) your account number, social security
or tax identification number and account registration; (ii) the Fund name from
which you are redeeming shares; and (iii) the amount to be redeemed. Wire
redemptions can be made only if the "yes" box has been checked on your Purchase
Application, and attach a copy of a void check of account where proceeds are to
be wired. Your bank may charge you a fee for receiving a wire payment on your
behalf.
Systematic Withdrawal Plan. An owner of $10,000 or more of shares of the
Fund may elect to have periodic redemptions from his account to be paid on a
monthly, quarterly, semiannual or annual basis. The minimum periodic payment is
$100. A sufficient number of shares to make the scheduled redemption will
normally be redeemed on the date selected by the shareholder. Depending on the
size of the payment requested and fluctuation in the net asset value, if any, of
the shares redeemed, redemptions for the purpose of making such payments may
reduce or even exhaust the account. A shareholder may request that these
payments be sent to a predesignated bank or other designated party. Capital
gains and dividend distributions paid to the account will automatically be
reinvested at net asset value on the distribution payment date.
Redemption of Small Accounts. Due to the disproportionately higher cost of
servicing small accounts, the Fund reserves the right to redeem, on not less
than 30 days' notice, an account in the Fund that has been reduced by a
shareholder to $500 or less. However, if during the 30-day notice period the
shareholder purchases sufficient shares to bring the value of the account above
$500, this restriction will not apply.
Redemption in Kind. All redemptions of shares of the Fund shall be made in
cash, except that the commitment to redeem shares in cash extends only to
redemption requests made by each shareholder of the Fund during any 90-day
period of up to the lesser of $250,000 or 1% of the net asset value of the Fund
at the beginning of such period. This commitment is irrevocable without the
prior approval of the SEC and is a fundamental policy of the Fund that may not
be changed without shareholder approval. In the case of redemption requests by
shareholders in excess of such amounts, the Board of Trustees reserves the right
to have the Fund make payment, in whole or in part, in securities or other
assets, in case of an emergency or any time a cash distribution would impair the
liquidity of the Fund to the detriment of the existing shareholders. In this
event, the securities would be valued in the same manner as the securities of
the Fund are valued. If the recipient were to sell such securities, he or she
could receive less than the redemption value of the securities and could incur
certain transaction costs.
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<PAGE> 21
DIVIDENDS, DISTRIBUTIONS AND FEDERAL INCOME TAX
The Fund intends to distribute to its shareholders substantially all of
their net tax-exempt interest income and their investment company taxable income
(which includes, among other items, dividends and taxable interest in excess of
expenses and, if any, net short-term capital gains over net long-term capital
losses). The Fund will declare distributions of such income daily and pay those
dividends monthly. The Fund intends to distribute, at least annually,
substantially all net capital gain (the excess of net long-term capital gains
over net short-term capital losses). In determining amounts of capital gains to
be distributed, any capital loss carryovers from prior years will be applied
against capital gains.
The SEI Kansas Tax Free Income Portfolio (the "SEI Fund") reorganized with
and into the Fund (the "Reorganization"). As part of the Reorganization, the
Fund received securities that are appropriate investments in exchange for shares
of the Fund. The Reorganization may result in adverse tax consequences under
certain circumstances to either the investors transferring shares of the SEI
Fund for shares of the Fund ("Reorganizing Shareholders") or to investors who
acquire shares of the Fund after a transfer ("new shareholders"). As a result of
the Reorganization, the Fund acquired some securities that have appreciated in
value or depreciated in value from the date they were acquired. If appreciated
securities are sold after the Reorganization, the amount of the gain would be
taxable to new shareholders as well as to reorganizing shareholders. The effect
of this for new shareholders would be to tax them on a distribution that
represents a return of the purchase price of their shares rather than an
increase in the value of their investment. The effect on Reorganizing
Shareholders would be to reduce their potential liability for tax on capital
gains by spreading it over a larger asset base. The opposite may occur if the
Fund acquires securities having an unrealized capital loss. In that case,
Reorganizing Shareholders will be unable to utilize the loss to offset gains,
but, because a Reorganization will not result in any gains, the inability of
Reorganizing Shareholders to utilize unrealized losses will have no immediate
tax effect. For new shareholders, to the extent that unrealized losses are
realized by the Fund, new shareholders may benefit by any reduction in net tax
liability attributable to the losses.
If you elect to receive distribution in cash and checks (1) are returned
and marked as "undeliverable" or (2) remain uncashed for six months, your cash
election will be changed automatically and your future dividend and capital
gains distributions will be reinvested in the Fund at the per share net asset
value determined as of the date of payment of the distribution. In addition, any
undeliverable checks or checks that remain uncashed for six months will be
canceled and will be reinvested in the Fund at the per share net asset value
determined as of the date of cancellation.
Distributions will be paid in additional Fund shares based on the net asset
value at the close of business on the payment date of the distribution, unless
the shareholder elects in writing, not less than five full business days prior
to the record date, to receive such distributions in cash. Dividends declared
in, and attributable to, the preceding month will be paid within five business
days after the end of each month. Shares purchased will begin earning dividends
on the day after the purchase order is executed, and shares redeemed will earn
dividends through the day the redemption is executed. Investors who redeem all
or a
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<PAGE> 22
portion of Fund shares prior to a dividend payment date will be entitled on the
next dividend payment date to all dividends declared but unpaid on those shares
at the time of their redemption.
The Fund intends to be treated as a regulated investment company under the
Internal Revenue Code of 1986 (the "Code"). As such, the Fund generally will not
pay Federal income tax on the income and gains the Fund pays as dividends to its
shareholders. In order to avoid a 4% Federal excise tax, the Fund intends to
distribute each year all of its income and gains.
To the extent that the Fund's dividends distributed to shareholders are
derived from interest income exempt from Federal income tax and are designated
as exempt-interest dividends by the Fund, they will be excludable from a
shareholder's gross income for regular Federal income tax purposes. The Fund
will qualify to pay exempt-interest dividends if, at the close of each quarter
of its taxable year, at least 50% of the value of its total assets consists of
securities on which interest payments are exempt from Federal income tax under
section 103 of the Code. The Fund will inform shareholders annually as to the
portion of the distribution paid which constitutes exempt-interest dividends.
The Fund is authorized to make investments which will give rise to taxable
rather that tax-exempt income. To the extent that the Fund's dividends are
derived from income from its taxable investments and from gain recognized by it,
they will be taxable to shareholders in the manner described above.
Tax-exempt interest on private activity bonds and exempt-interest dividends
attributable to private activity bonds generally are treated as tax preference
items for purposes of the Federal alternative minimum tax. The Fund may purchase
private activity bonds, such as industrial development bonds that may be subject
to the alternative minimum tax.
The entire amount of exempt-interest dividends received from the Fund will
be part of an adjustment in computing Federal alternative minimum taxable income
for purposes of the Alternative Minimum Tax and the Environmental Tax under Code
Section 59A.
Up to 85% of an individual's social security benefits and certain railroad
retirement benefits may be subject to Federal income tax. Along with other
factors, total tax-exempt income, including exempt-interest dividends, is used
to calculate the portion of such benefits that are taxed.
There could be retroactive revocation of the tax-exempt status of certain
municipal obligations after their issuance. It is not possible to predict the
precise impact of these provisions, but they may affect the value of the
securities in the Fund's portfolio.
Shareholders should be aware that redeeming shares of the Fund after
tax-exempt interest income has been accrued by the Fund but before that income
has been declared as a dividend may be disadvantageous. This is because the
gain, if any, on the redemption will be taxable, even though such gain may be
attributable in part to the accrued tax-exempt interest which, if distributed to
the shareholder as a dividend rather that as redemption proceeds, might have
qualified as an exempt interest dividend. All or a portion of interest on
indebtedness incurred or continued (or deemed under tax rules to be incurred or
continued) by shareholders to purchase or carry shares of the Fund may not be
deductible for Federal income tax purposes.
The treatment for state, local and municipal tax purposes of distributions
of exempt-
20
<PAGE> 23
interest dividends and dividends derived from interest on certain Federal
obligations will vary according to the laws of state and local taxing
authorities. Exempt-interest dividends and other dividends may be subject to
state and local taxation. Investors should consult with their tax advisers as to
the availability of any exemptions from such taxes. Persons who may be
"substantial users" (or "related persons" of substantial users) of facilities
financed by private activity bonds may suffer adverse tax consequences from
investing in the Fund and, therefore, should consult their tax advisers before
purchasing the Fund's shares. In some instances, a state or city may exempt from
tax the portion of the distribution from the Fund that represents interest
received on obligations of that state or its political subdivisions and on
certain Federal obligations. Under the laws of certain other states and cities,
the entire amount of any such distribution may be taxable.
The preceding discussion primarily relates to Federal income taxes; the
consequences under other tax laws may differ.
The following is a general, abbreviated summary of certain of the
provisions of the Kansas tax code presently in effect as they directly govern
the taxation of shareholders subject to Kansas personal income tax. These
provisions are subject to change by legislative or administrative action, and
any such change may be retroactive.
Under Kansas law, interest on all obligations issued by the State of Kansas
or its political subdivisions after December 31, 1987, is excluded from Kansas
adjusted gross income in determining Kansas tax liability, and interest from
obligations issued prior to January 1, 1988, is exempt from Kansas income tax
only if there is statutory authority exempting the interest from the particular
obligations in question. For Kansas income tax purposes, interest on the
above-described obligations is exempt for both the Fund and its shareholders who
are Kansas residents.
For additional information relating to taxation, see the SAI.
INVESTMENT RESTRICTIONS
The Fund also operates under certain investment restrictions. Certain of
the Fund's investment restrictions are set forth below. For a complete list of
all the Fund's investment restrictions, see the section in the Fund's SAI
entitled "Investment Restrictions." The following investment restrictions are
fundamental policies of the Fund, which can be changed only when permitted by
law and approved by a majority of the Fund's outstanding voting securities. The
non-fundamental investment restrictions can be changed by approval of a majority
of the Board of Trustees. A "majority of the outstanding voting securities"
means the lesser of (i) 67% of the shares represented at a meeting at which more
than 50% of the outstanding shares are represented in person or by proxy or (ii)
more than 50% of the outstanding shares. See "Other Information--Voting" herein
(1)The Fund may not borrow money or pledge or mortgage its assets, except that
the Fund may enter into reverse repurchase agreements or borrow from banks up
to 10% of the current value of its total net assets for temporary or
emergency purposes and those borrowings may be secured by the pledge of not
more than 15% of the current value of the Fund's total net assets (but
investments may not be purchased by the Fund while any such borrowings
exist).
21
<PAGE> 24
(2)The Fund may not make loans, except that the Fund may enter into repurchase
agreements with respect to portfolio securities and may purchase the types of
debt instruments described in this Prospectus.
(3)With respect to 75% of its assets, purchase a security if as a result, more
than 5% of its total assets would be invested in any one issuer other than
the U.S. Government or its agencies or instrumentalities.
(4) The Fund may not acquire more than 10% of the outstanding voting securities
of any one issuer.
If a percentage restriction on investment policies or the investment or use
of assets set forth in this Prospectus are adhered to at the time a transaction
is effected, later changes in percentage resulting from changing values will not
be considered a violation.
As a matter of Fundamental Policy, notwithstanding any limitation
otherwise, the Fund is authorized to seek to achieve its investment objective by
investing all of its investible assets in an investment company having
substantially the same investment objective and policies as the Fund.
RISKS OF INVESTING IN THE FUND
CERTAIN RISK CONSIDERATIONS
The price per share of the Fund will fluctuate with changes in value of the
investments held by the Fund. For example, the value of shares of the Fund will
generally fluctuate inversely with the movements in interest rates.
There is, of course, no assurance that the Fund will achieve its investment
objective or be successful in preventing or minimizing the risk of loss that is
inherent in investing in particular types of investment products. In order to
attempt to minimize that risk, the Adviser monitors developments in the economy,
the securities markets, and with each particular issuer.
RISK OF INVESTING IN KANSAS MUNICIPAL OBLIGATIONS.
Because the Fund will concentrate its investment in Kansas Municipal
Obligations, it may be affected by political, economic or regulatory factors
that may impair the ability of Kansas issuers to pay interest on or to repay the
principal of their debt obligations. Kansas Municipal Obligations may be subject
to greater price volatility than municipal obligations in general as a result of
the effect of supply and demand for these securities which, in turn, could cause
greater volatility in the value of the shares of the Fund.
The following information as to certain Kansas risk factors is only a brief
summary of the factors affecting the financial condition of the State of Kansas,
it does not purport to be a complete description and is based on information
from official statements relating to municipal obligations issued by the State
of Kansas.
Kansas ranks as the 14th largest state in terms of size with an area in
excess of 82,000 square miles. As of 1994, the population is estimated to be
2,554,047, which is up from a population of 2,477,588 in 1990. This represents a
percentage increase of 3.1%. In comparison, the growth in population in the U.S.
was 4.7%.
Kansas' economy is based primarily on agriculture, manufacturing, and
services. Kansas projected a positive general fund balance for its 1996 fiscal
year (on estimated general fund revenues of approximately $3.367 bil-
22
<PAGE> 25
lion). Currently there are no general obligation ratings for Kansas.
Obligations of issuers of Kansas Municipal Obligations are subject to the
provisions of bankruptcy, insolvency and other laws affecting the rights and
remedies of creditors, such as the Federal Bank Reform Act of 1978. In addition,
the obligations of such issuers may become subject to the laws enacted in the
future by Congress or the Kansas legislatures or by referenda extending the time
for payment of principal and/or interest, or imposing other constraints upon
enforcement of such obligations or upon municipalities to levy taxes. There is
also the possibility that, as a result of legislation, litigation involving the
taxation of municipal obligations or the rights of municipal obligation holders,
or other conditions, the power or ability of any issuer to pay, when due, the
principal of and interest on its Kansas Municipal Obligations may be materially
affected. Additional considerations relating to the risks of investing in Kansas
Municipal Obligations are presented in the SAI.
OTHER INFORMATION
CAPITALIZATION
INTRUST Funds Trust was organized as a Delaware business trust on January
26, 1996, and currently consists of six separately managed portfolios, one of
which is described in this Prospectus. The Board of Trustees may establish
additional portfolios in the future. The capitalization of the Trust consists
solely of an unlimited number of shares of beneficial interest with a par value
of $0.001 each. When issued, shares of the Fund are fully paid, non-assessable
and freely transferable.
The Funds are offered at net asset value only to certain institutional
investors, or other investors who at the time of purchase have a balance of
$1,000 or more invested in any of the INTRUST Funds, are purchasers through a
trust investment manager or account manager or administered by INTRUST, are
employees or ex-employees of INTRUST Financial Corporation or any of its
affiliates, employees of BISYS or any other service provider, or employees of
any trust customer of INTRUST Financial Corporation or any of its affiliates.
Shares in the Institutional Premium Class of shares may be subject to an
additional shareholder servicing charge of up to 0.50% of average net assets.
Call 888-266-8787 or contact your sales representative, broker-dealer or bank to
obtain more information about the Fund's Classes of shares.
Under Delaware law, shareholders could, under certain circumstances, be
held personally liable for the obligations of the Trust. However, the
Declaration of Trust disclaims liability of the shareholders, Trustees or
officers of the Trust for acts or obligations of the Trust, which are binding
only on the assets and property of the Trust and requires that notice of the
disclaimer be given in each contract or obligation entered into or executed by
the Trust or the Trustees. The Declaration of Trust provides for indemnification
out of Trust property for all loss and expense of any shareholder held
personally liable for the obligations of the Trust. The risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Trust itself would be unable to meet its obligations
and should be considered remote.
VOTING
Shareholders have the right to vote in the election of Trustees and on any
and all matters on which, by law or under the provisions of the Declaration of
Trust, they may be entitled to
23
<PAGE> 26
vote. The Trust is not required to hold regular annual meetings of the Funds'
shareholders and does not intend to do so. The Trustees are required to call a
meeting for the purpose of considering the removal of a person serving as
Trustee if requested in writing to do so by the holders of not less than 10% of
the outstanding shares of the Trust and in connection with such meeting to
comply with the shareholders' communications provisions of Section 16(c) of the
Act. See "Other Information--Voting Rights" in the SAI.
Shares entitle their holders to one vote per share (with proportionate
voting for fractional shares). As used in this Prospectus, the phrase "vote of a
majority of the outstanding shares" of the Fund (or the Trust) means the vote of
the lesser of: (1) 67% of the shares of the Fund (or the Trust) present at a
meeting if the holders of more than 50% of the outstanding shares are present in
person or by proxy; or (2) more than 50% of the outstanding shares of the Fund
(or the Trust).
PERFORMANCE INFORMATION
The Fund may, from time to time, include yield and total return information
in advertisements or reports to shareholders or prospective investors.
Shareholders of the Institutional Premium Class of shares will experience a
lower net return on their investment than shareholders of the Institutional
Service Class of shares because of the additional shareholder servicing charge
to which Institutional Premium Class shareholders are subject. The methods used
to calculate the yield and total return of the Fund are mandated by the SEC.
Quotations of "yield" will be based on the investment income per share
during a particular 30-day (or one month) period (including dividends and
interest), less expenses accrued during the period ("net investment income"),
and will be computed by dividing net investment income by the maximum public
offering price per share on the last day of the period.
Quotations of yield and effective yield reflect only the Fund's performance
during the particular period on which the calculations are based. Yield and
effective yield for the Fund will vary based on changes in market conditions,
the level of interest rates and the level of the Fund's expenses, and no
reported performance figure should be considered an indication of performance
which may be expected in the future.
Quotations of average annual total return for the Fund will be expressed in
terms of the average annual compounded rate of return of a hypothetical
investment in that Fund over periods of 1, 5 and 10 years (up to the life of
that Fund), reflect the deduction of a proportional share of Fund expenses (on
an annual basis), and assume that all dividends and distributions are reinvested
when paid.
The Fund may also advertise its "taxable equivalent yield." Taxable
equivalent yield is the yield that an investment, subject to Federal and Kansas
personal income taxes, would need to earn in order to equal, on an after-tax
basis, the yield on an investment exempt from such taxes (normally calculated
assuming the maximum combined Federal and Kansas marginal tax rate). A taxable
equivalent yield quotation for the Fund will be higher than the yield or the
effective yield quotations for the Fund.
The following table shows how to translate the yield of an investment that
is exempt from both Federal and Kansas personal income taxes into a taxable
equivalent yield for the 1996 taxable year. The last four columns of the table
show approximately how much a taxable investment would have to yield in order to
24
<PAGE> 27
generate an after-tax (Federal and Kansas personal income taxes) yield of 5%,
6%, 7% or 8%. For example, the table shows that a married taxpayer filing a
joint return with taxable income of $50,000 would have to earn a yield of
approximately 10.39% before Federal and Kansas personal income taxes in order to
earn a yield after such taxes of 7%.
1996 TAXABLE YEAR
TAXABLE EQUIVALENT YIELD TABLE -- FEDERAL AND KANSAS PERSONAL INCOME TAXES*
<TABLE>
<CAPTION>
TAXABLE INCOME(1)
- ---------------------------------------------- TO EQUAL HYPOTHETICAL TAX-FREE
MARRIED FILING JOINTLY YIELD OF
---------------------- 5%, 6%, 7% OR 8% A TAXABLE
COMBINED INVESTMENT
MARGINAL WOULD HAVE TO YIELD APPROXIMATELY
TAX ----------------------------------
SINGLE RATE(2,) 5% 6% 7% 8%
- -------------------- (3) ---- ----- ----- -----
----------
<S> <C> <C> <C> <C> <C> <C>
$ 0 - $ 30,000 17.98% 6.10% 7.31% 8.53% 9.75%
$ 0 - $ 20,000 18.74% 6.15% 7.38% 8.61% 9.84%
$ 30,001 - $ 60,000 20.31% 6.27% 7.53% 8.78% 10.04%
$ 20,001 - $ 30,000 21.38% 6.36% 7.63% 8.90% 10.17%
$ 60,001 - $ 96,900 32.64% 7.42% 8.91% 10.39% 11.88%
$ 30,001 - $ 58,150 33.58% 7.53% 9.03% 10.54% 12.04%
$ 96,901 - $147,700 35.45% 7.75% 9.30% 10.84% 12.39%
$ 58,151 - $121,300 36.35% 7.86% 9.43% 11.00% 12.57%
$147,701 - $263,750 40.13% 8.35% 10.02% 11.69% 13.36%
$121,301 - $263,750 40.96% 8.47% 10.16% 11.86% 13.55%
Over $263,750 43.50% 8.85% 10.62% 12.39% 14.16%
Over $263,750 44.28% 8.97% 10.77% 12.56% 14.36%
</TABLE>
- ---------------
(1) Assuming the Federal alternative minimum tax is not applicable.
(2) The combined marginal rates were calculated using Federal tax rate tables
for the 1996 taxable year and Kansas tax rates for the 1996 taxable year.
The Federal tax rate table is indexed each year to reflect changes in the
Consumer Price Index and the Kansas tax rate table is constant until changed
by statute.
(3) The combined Federal and Kansas personal income tax marginal rates assume
that Kansas income taxes are fully deductible for Federal income tax
purposes as an itemized deduction. However, the ability to deduct itemized
deductions (including state income taxes) for Federal income tax purposes is
limited for those taxpayers whose Federal adjusted gross income for 1996
exceeds $117,950 ($58,975 in the case of a married individual filing a
separate return).
* This chart is prepared for general information purposes only. Tax equivalent
yields are a useful tool in determining the benefits of a tax-exempt
investment; however, tax equivalent yields should not be regarded as
determinative of the desirability of such an investment. In addition, this
chart is based on a number of assumptions which may not apply in each
individual case. An investor should therefore consult a competent tax adviser
regarding tax equivalent yields in individual circumstances.
The Kansas Tax-Exempt Bond Fund is the successor to the Kansas Tax Free
Income Portfolio of the SEI Tax Exempt Trust (the "SEI Fund") a registered
investment company for which the Adviser was the investment adviser until the
SEI Fund was reorganized into the Kansas Tax-Exempt Bond Fund. The Kansas
Tax-Exempt Bond Fund has the same investment objectives and policies as the SEI
Fund. Investors in the SEI Fund were invited to invest in the Kansas Tax Exempt
Bond Fund at its inception. Set forth below are certain performance data for the
SEI Fund. The data shown below reflects total return for the periods shown,
reduced by the actual expense ratio for such SEI Fund. To the extent
25
<PAGE> 28
expense waivers or reimbursements were in effect during the periods indicated
below, actual returns would have been lower had such expense waivers or
reimbursements not been in effect. However, this performance data is not
necessarily indicative of the future performance of the Funds. The SEI Fund
performance reflects fees and expenses that may be lower than fees for the
Kansas Tax-Exempt Bond Fund after its first year of operation. The performance
shown would have been lower if such higher fees and expenses were in effect.
ANNUALIZED TOTAL RETURN FOR
THE PERIOD ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
LEHMAN 7 YEAR
GENERAL OBLIGATION INDEX*
--------------------------
<S> <C> <C>
1 Year................................................ 4.64% 4.46%
3 Years............................................... 4.24% 4.64%
5 Years............................................... 6.56% 6.86%
Since Inception (2/10/90)............................. 6.68% not available
</TABLE>
* The Adviser selected the Lehman 7 Year General Obligation Index because,
although the SEI Fund states that it will seek to maintain a dollar-weighted
average portfolio maturity of between 7 and 12 years, the actual
dollar-weighted average portfolio maturity of the SEI Fund since its inception
was 8.21 years.
ACCOUNT SERVICES
All transactions in shares of the Fund will be reflected in a statement for
each shareholder. In those cases where a Service Organization or its nominee is
shareholder of record of shares purchased for its customer, the Fund has been
advised that the statement may be transmitted to the customer at the discretion
of the Service Organization.
BISYS acts as the Fund's transfer agent. The Trust compensates BISYS, the
Trust's administrator, pursuant to a Services Agreement, for providing personnel
and facilities to perform dividend disbursing and transfer agency-related
services for the Trust. See "Management of the Fund."
SHAREHOLDER INQUIRIES
All shareholder inquiries should be directed to BISYS Fund Services.
26
<PAGE> 29
APPENDIX
DESCRIPTION OF MOODY'S BOND RATINGS:
Excerpts from Moody's description of its four highest bond ratings are
listed as follows: Aaa -- judged to be the best quality and they carry the
smallest degree of investment risk; Aa -- judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally known
as high grade bonds; A -- possess many favorable investment attributes and are
to be considered as "upper medium grade obligations"; Baa -- considered to be
medium grade obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time.
Moody's also supplies numerical indicators 1, 2 and 3 to rating categories.
The modifier 1 indicates that the security is in the higher end of its rating
category; the modifier 2 indicates a mid-range ranking; and modifier 3 indicates
a ranking toward the lower end of the category.
DESCRIPTION OF S&P'S BOND RATINGS:
Excerpts from S&P's description of its four highest bond ratings are listed
as follows: AAA -- highest grade obligations, in which capacity to pay interest
and repay principal is extremely strong; AA -- also qualify as high grade
obligations, having a very strong capacity to pay interest and repay principal,
and differs from AAA issues only in a small degree; A -- regarded as upper
medium grade, having a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories; BBB
- -- regarded as having an adequate capacity to pay interest and repay principal.
Whereas it normally exhibits adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for debt in this category than in
higher rated categories.
S&P applies indicators "+, -," no character, and relative standing within
the major rating categories.
DESCRIPTION OF MOODY'S RATINGS OF NOTES AND VARIABLE RATE DEMAND INSTRUMENTS:
Moody's ratings for state and municipal short-term obligations will be
designated Moody's Investment Grade or MIG. Such ratings recognize the
differences between short-term credit and long-term risk. Short-term ratings on
issues with demand features (variable rate demand obligations) are
differentiated by the use of the VMIG symbol to reflect such characteristics as
payment upon periodic demand rather than fixed maturity dates and payments
relying on external liquidity.
MIG 1/VMIG 1: This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.
MIG 2/VMIG 2: This denotes high quality. Margins of protection are ample
although not as large as in the preceding group.
DESCRIPTION OF MOODY'S TAX-EXEMPT COMMERCIAL PAPER RATINGS:
Moody's commercial paper ratings are opinions of the ability of issuers to
repay punctually promissory obligations which have an
A-1
<PAGE> 30
original maturity not exceeding nine months. Moody's makes no representation
that such obligations are exempt from registration under the Securities Act of
1933, nor does it represent that any specific note is a valid obligation of a
rated issuer or issued in conformity with any applicable law. The following
designations, all judged to be investment grade, indicate the relative repayment
ability of rated issuers of securities in which the Trust may invest.
PRIME-1: Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term promissory obligations.
PRIME-2: Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term promissory obligations.
DESCRIPTION OF S&P'S RATINGS FOR MUNICIPAL BONDS:
INVESTMENT GRADE
AAA: Debt rated "AAA" has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA: Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small degree.
A: Debt rated "A" has strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB: Debt rated "BBB" is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
DESCRIPTION OF S&P'S RATINGS FOR INVESTMENT GRADE MUNICIPAL NOTES AND SHORT-TERM
DEMAND OBLIGATIONS:
SP-1: Issues carrying this designation have a very strong or strong capacity to
pay principal and interest. Those issues determined to possess overwhelming
safety characteristics will be given a plus (+) designation.
SP-2: Issues carrying this designation have a satisfactory capacity to pay
principal and interest.
DESCRIPTION OF S&P'S RATINGS FOR DEMAND OBLIGATIONS AND TAX-EXEMPT COMMERCIAL
PAPER:
An S&P commercial paper rating is a current assessment of the likelihood of
timely repayment of debt having an original maturity of no more than 365 days.
The two rating categories for securities in which the Trust may invest are as
follows:
A-L: This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics will be denoted with a plus (+) designation.
A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1."
A-2
<PAGE> 31
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 32
Address for
Trust Clients of INTRUST Bank, N.A.
105 North Main Street
Box One
Wichita, Kansas 67202
Investment Adviser
INTRUST Bank, N.A.
105 North Main Street
Box One
Wichita, Kansas 67202
Administrator and Sponsor and
Distributor
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219
Custodian
INTRUST Bank, N.A.
105 North Main Street
Box One
Wichita, Kansas 67202
Counsel
Baker & McKenzie
805 Third Avenue
New York, New York 10022
Independent Accountants
KPMG Peat Marwick LLP
Two Nationwide Plaza
Columbus, Ohio 43215
INTRUST FUNDS TRUST
A FAMILY OF
MUTUAL FUNDS
KANSAS TAX-EXEMPT
BOND FUND
PROSPECTUS
January 8, 1997
INSTRUST LOGO
INVESTMENT ADVISER
INTRUST BANK, N.A.
<PAGE> 33
INTRUST FUNDS TRUST
KANSAS TAX-EXEMPT BOND FUND (THE "FUND")
SUPPLEMENT DATED MARCH 28, 1997 TO PROSPECTUS DATED JANUARY 8, 1997
The following is a supplement to the Fund's Prospectus dated January 8,
1997. The supplement should be read in conjunction with the Prospectus.
Shareholders of the Kansas Tax Free Income Portfolio (the "SEI Fund"), a
series of SEI Tax-Exempt Trust are considering the approval of a reorganization
of the SEI Fund with and into the Fund (the "Reorganization"). The Shareholder
Meeting of the SEI Fund is scheduled for April 28, 1997. If shareholders of the
SEI Fund approve the Reorganization, it is expected that the closing (the
"Closing") of the Reorganization will take place in May 1997. The Fund's
prospectus attached hereto has been written assuming the Closing has taken
place. If the Closing does not take place, the Fund will notify Shareholders and
amend this prospectus accordingly.
